Finance
In early trade on Monday, the rupee fell 67 paise to a record low of 87.29 against the US dollar, as Trump tariffs on Canada, Mexico, and China sparked worries of a global trade war.
Donald Trump imposed 25% tariffs on Canada and Mexico, as well as 10% tariffs on China, in what currency dealers saw as the first strike in a potentially disastrous global trade war.
The rupee remained under pressure due to prolonged foreign money outflows and the wide strength of the US dollar in global markets as a result of uninterrupted dollar demand from oil importers and a low risk appetite, they added.
At the interbank foreign exchange, the rupee began at 87.00 and fell to 87.29 against the US dollar in early trade, a 67-paise drop from its previous close.
On Friday, the rupee remained steady at 86.62 versus the US dollar.
“The start of the week saw financial markets on edge as US President Donald Trump followed through on his tariff threats, imposing duties on imports from Mexico, Canada, and China,” CR Forex Advisors MD- Amit Pabari said.
This escalating trade war has fuelled risk aversion, propelling safe-haven demand for the US dollar, which has surged toward 109.50 levels, Pabari added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 1.30 per cent higher at 109.77.
“The US dollar surged on Trump Tariffs sending global FX to multi-year lows as the Euro fell to 1.0224, GBP to 1.2261 and Yen to 155.54. The US dollar index rose to 109.77, while US 10-year yields were at 4.4980 per cent.
“Amongst Asian currencies Yuan slumped to 7.3551, IDR to 16448 and KRW to 1470,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Brent crude, the global oil benchmark, climbed 0.71% to USD 76.21 a barrel in futures trading.
In the domestic equities market, the 30-share BSE Sensex was down 575.89 points, or 0.74%, at 76,930.07 points, while the Nifty was down 206.40 points, or 0.88%, at 23,275.75 points.
Foreign institutional investors (FIIs) sold equities worth Rs 1,327.09 crore in the capital markets on a net basis on Saturday, according to trade data.
Meanwhile, India’s currency reserves climbed by USD 5.574 billion to USD 629.557 billion in the week ending January 24, the Reserve Bank reported on Friday.
In the previous reporting week, the total kitty had fallen by USD 1.888 billion to USD 623.983 billion.
The reserves have been dropping for the past several weeks, and the reduction has been ascribed to revaluation, as well as foreign market interventions by the Reserve Bank of India (RBI) to help limit rupee volatility.
Source: IE
